THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY

USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT

POLICY

Voluntary - Public

Date: 2/18/2010

GAIN Report Number: NZ1001

New Zealand

Post: Wellington

New Zealand Wood Products and Forestry Report (MY2009)

Report Categories:

Wood Products

Approved By:

Laura Scandurra

Prepared By:

David Lee-Jones

Report Highlights:

Net planted area is continuing to decline in New Zealand falling to an estimated 1.75 million hectares as

of April 2009. Wood and wood product exports, excluding pulp and paper, were down 8.4% on a value

basis in MY 2009. However, exports to China were up significantly due to a boom in log exports, up

154%. New Zealand’s forestry sector was brought into the country’s Emissions Trading Scheme in

January 2008. Other sectors, including agriculture, will be brought into the scheme over time. New

Zealand has been selling carbon credits on the international market as the domestic market is just

beginning to develop.

Executive Summary

The full impact of the global credit crisis and

ensuing economic slowdown was sheeted

home to the New Zealand wood processing

sector during marketing year (MY) 2009.

Housing consents for the 12 months to

November 2009 fell to 14,199, having

peaked at 31,618 in 2004. Lumber and wood

product exports to the US market, one of the

most valuable for New Zealand, were only

214,562 cubic meters (m3) during MY 2009

(October 2008 – September 2009), a far cry

from the 500-600,000 m3 considered the

norm earlier in the decade. A bright spot was

a strengthening in lumber prices during the

year, which meant that the average annual

price was 28% higher than the previous year

at NZD 879/m3.

Exports of all wood products, including pulp

and paper, totaled USD 2.12 billion during

MY 2009, a 14% decrease compared to the previous year. However, due to a depreciation of the Kiwi

dollar during the first half of the year, in NZD terms, export receipts actually increased 8.6%.

The impact of the economic downturn was mediated in 2009 because of one dominant factor: Chinese

demand for logs. While total log exports were up 33% to 8.4 million m3, exports to China grew by an

astounding 154% in MY 2009. Total roundwood removals were up by 3% to 20.23 million (m) m3.

Net planted area continued to decline falling to an estimated 1.751 m hectares (ha) in April 2009, down

76,000 ha from the peak in 2003. Among other things, this is partly the result of the race to deforest

land suitable for dairying prior to January 2008, which was when the forestry sector was brought under

the Emissions Trade Scheme (ETS). The uncertainty associated with the implementation of the ETS has

increased caution in the sector, breeding a general unwillingness to plant new trees and putting a damper

on the trading of forest carbon credits, which is only now beginning to gather momentum.

During the last two years, New Zealand has concluded Free Trade Agreements with China, ASEAN,

Malaysia, the Gulf Cooperation Council and Hong Kong. While these FTAs offer significant benefits to

New Zealand, wood products, in most cases, already enter duty free or at low tariff levels.

Research in New Zealand, both Government-supported and private, seems to be focused on the product

end of the forestry and wood spectrum. Products being researched range from steel cable reinforced

wood beams suitable for construction of up to 20 story buildings to harvesting bio-energy from wood

and tree residue. In addition, there is ongoing emphasis on research associated with the environmental

benefits of forestry and wood products such as carbon sequestration and reduced nitrate leaching.

The outlook for the forestry and wood product sectors is very much a “steady as she goes” story for the

next year. Most commentators agree that the rate of log exports to China is unlikely to slow down over

the next year. This will provide a good base for forestry companies to maintain their harvest removals,

and potentially increase them by 3-5% if housing starts in New Zealand pick up. Housing consent data

from the last few months suggests that the worst of the housing downturn is over. Looking further

forward, New Zealand has the potential to increase its plantation forest estate by at least one million ha

if currently uneconomic or semi-idle agricultural land is put into use.

Production

Forest Situation

The volume of timber harvested in MY 2009 reached 20,231,000 m3, up 3% on the previous year.

During the September 2009 quarter, the total amount harvested reached 5,802,000 m3, the highest level

since September 2002.

Average Age of Trees Removed

Nationally, the rotation length is approximately 37-40 years, which implies that the average age of trees

is getting older. Available statistics indicate that the average age of trees harvested is now 28.3 years.

Indigenous Forests

Indigenous forests in New Zealand cover over three times the land area of plantation forests. About 5

million hectares of indigenous forest are owned by the state and a further 1.3 million hectares are

privately owned. Harvesting of government-owned indigenous forest is not permitted. The bulk of this

land is managed by the Department of Conservation for conservation, biodiversity, catchment

management, and recreation purposes.

According to MAF estimates, timber harvested from privately-owned indigenous forests in calendar

year 2008 totaled 14,000 m3 compared to 19,100,000 m3 for plantation forests. Under the legislation

for indigenous forest management, harvesting must be done on a sustainable basis, which means only

single trees or small groups of trees can be harvested at any one time. Currently, 50,000 ha are

permitted to be harvested, which equates to an annual harvest of approximately 78,000 m3 of logs.

MAF estimates that up to 250,000 ha of indigenous forest could be sustainably managed.

Planted Area

Source: MAF

According to MAF’s national exotic forest description, planted area peaked in 2003 at 1.827 million ha.

Since then, planted area has fallen to 1.751 million ha. The main reasons accounting for the 76,000 ha

Plantation Forest Area in New Zealand

400

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800

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1976

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2008

1000's Hectares

decline include a land use shift away from forestry to dairy farming, especially in the central North

Island and in Canterbury on the South Island, and the associated lack of replanting.

There was a rush to deforest land suitable for dairy production prior to January 1, 2008 when the ETS

came into force. Under the scheme, deforestation or land use change away from forestry is penalized.

The penalty is based on the GHG emitted (under Kyoto rules) multiplied by the price of carbon at the

time. This deforestation is just beginning to show up in the national statistics and the full impact should

be known within the next year or two.

The New Zealand Government has implemented several programs to encourage additional plantings

including the Permanent Forest Sink Initiative, which is aimed at establishing forests for garnering

carbon credits; the Afforestation Grant Scheme, which is designed to encourage planting of trees in

small forests and on farms; and the East Coast Forestry Project, which was set up in 1992 to promote the

planting of commercial forests on severely eroding land. The ETS also allows for the ownership of

carbon credits from post-1989 forests to be devolved back to their owners. However, none of these

programs seem to have arrested the recent decline in plantation forest area. For more information see:

http://www.maf.govt.nz/forestry

Illegal Logging

In December 2009, the New Zealand Government adopted a policy to address the legality and

sustainability of New Zealand’s timber trade. The policy specifies international, bilateral and domestic

steps to address the issue. For instance, the Government is actively participating in international

negotiations advocating for the adoption of a Reducing Emissions from Deforestation and Degradation

(REDD) mechanism, which is intended to reduce illegal logging in rain forests. It is also supporting

efforts to have Kwila listed in Appendix II of the Convention on International Trade in Endangered

Species (CITES). Bilaterally, New Zealand is seeking to develop a joint strategy with Australia to

address illegal logging and sustainable forest management, especially in the Asia Pacific region and

potentially within the context of free trade agreements. Domestically, the Government has announced

that it will support the development of a voluntary code of practice to encourage the verification of the

legality of imported timber and timber products as well as the provision of consumer information on

legality and sustainability.

National Plantation Forest Estate Statistics

04/01/08 04/01/08

Forest area

Net stocked area (ha) 1 761 000 1 751 000

Harvested area awaiting restocking (ha) 47 500 43 700

Total forest area (note 6) 1 808 500 1 794 700

Growth characteristics

Standing volume (000 m3) 445 933 456 874

Average standing volume (m3/ha) 253 261

Area-weighted average age (years) 15.2 15.6

Area by species (note 1)

Radiata pine (ha) 1 575 000 1 568 000

Douglas-fir (ha) 111 000 109 000

Cypress species (ha) 9 000 9 000

Other softwoods (ha) 26 000 26 000

Eucalyptus species (ha) 25 000 25 000

Other hardwoods (ha) 15 000 13 000

Radiata pine area by tending regime

Pruned with production thinning (ha) 213 000 216 000

Pruned without production thinning (ha) 706 000 728 000

Unpruned with production thinning (ha) 34 000 31 000

Unpruned without production thinning (ha) 622 000 593 000

Planting statistics Year Ended 12/31/07 12/31/08

Total estimated new planting (ha) (note 2) 2 400 1 100

Restocking (ha) 34 700 29 500

Harvesting Statistics Year Ended (note 3) 03/31/08 03/31/09

Area clear felled - all species (ha) (note 4) 41 400 41 800

Area clear felled - radiata pine (ha) (note 5) 38 500 37 700

Volume clear felled - all species (000 m3) (note 6) 18 663 19 192

Volume production thinned - all species (000 m3) 195 1905

Total volume removed - all species (000 m3) 18 858 19 382

Average clear fell yield - all species (m3/ha) 451 459

Volume clear felled - radiata pine (000 m3) 17 753 18 095

Average clear fell yield - radiata pine (m3/ha) 461 480

Area-weighted average clear fell age for radiata pine (years) 27.9 28.3

Estimated planted forest roundwood removal (000m3) (note 5) 20 388 18 847

Source: National Exotic Forest Description as of April 1, 2008, Ministry of Agriculture and Forestry, 2009.

Notes

1. Individual entries may not add to totals due to rounding.

2. The method used to estimate new planting is described on page 6 of A National Exotic Forest Description as at 1 April

2008, Ministry of Agriculture and Forestry, 2009.

3. All volumes are reported as recovered volumes inside bark.

4. These figures contain data from 2009 NEFD survey and estimates based on 2008 NEFD survey.

5. Source: Annual log and roundwood removal statistics, Ministry of Agriculture and Forestry, 2009. This is an indirect

estimate that uses conversion factors for each forestry product to estimate the total roundwood input that would be required to

produce total forest product outputs. It is included here as a comparison with the direct estimate of the total volume removed

from the 2009 NEFD Survey.

6. The decrease in total forest area between 1 April 2008 and 1 April 2009 should not be taken as a measure of deforestation.

A deforestation estimate will be included in the full NEFD 2009 report.

The national exotic forest estate description as at April 1, 2009 published by MAF can be found at:

http://www.maf.govt.nz/mafnet/publications/nefd/national-exotic-forest-2009/

Forestry Sector Outlook

There is considerable potential to expand the area planted to forests in New Zealand, especially as a

means of addressing environmental concerns, such as erosion, sequestering carbon, and producing

biomass to meet energy needs. According to Landcare Research, a crown research institute, at least one

million hectares of the least productive farmland in New Zealand could be planted in trees to slow

erosion and increase carbon sequestration. Likewise, research into bioenergy options by SCION, the

forestry and biomaterials crown research institute, indicates that there is a significant opportunity for

New Zealand to develop a purpose-grown forestry-based biomass resource that could potentially meet

national-scale demands for consumer energy. The biomass arising from these forests, which would

largely be planted on steep terrain or relatively low producing agricultural grazing land, could be used to

provide heat, electricity and transport fuels for New Zealand while mitigating some environmental

issues including carbon, water quality and erosion. While further research is necessary, under the

afforestation scenarios analyzed by SCION, recoverable forest biomass production of 640 to 900 m3 per

ha was estimated to be possible from a 25-year rotation forest management regime that focuses on

biomass. A significant percentage of the crop could then also be used to produce sawn logs for

traditional export markets. For additional information on SCION’s research, please visit:

http://www.scionresearch.com/__data/assets/pdf_file/0005/5783/Large-scale-bioenergy-from-

forestry.pdf and,

http://www.scionresearch.com/__data/assets/pdf_file/0014/6800/Bioenergy-Options-Transition-

Report.pdf

Solid Wood Products Situation & Outlook

Situation

Source: MAF, Global Trade Atlas

Source: MAF

New Zealand Quarterly Forest Wood Removals

0

1000

2000

3000

4000

5000

6000

7000

31 M

ar 2

006

30 Jun

e 20

06

30 S

ep 2

006

30 D

ec 2

006

31 M

ar 2

007

30 Jun

e 20

07

30 S

ep 2

007

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10

00

's m

3

Logs Exported to China Other Log Exports All Other Wood Removals

Quarterly New Zealand Pruned Log Prices (Average prices either delivered to Mill or FOB)

0

50

100

150

200

250

300

350

Ju

n-9

4

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n-9

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n-9

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8

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n-9

9

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n-0

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n-0

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Ju

n-0

8

Ju

n-0

9

NZ

$/m

3

Domestic Pruned(P1) Log Price Export Pruned Log Price

Source: StatisticsNZ

Source: StatisticsNZ

Processing Plants/Mills

The number of processing plants in New Zealand has been steadily declining. In 2001, there were

approximately 140 processing plants producing more than 2,500 m3 of product per annum. Since 2003,

there have been 32 mill closures taking an estimated 2.4 million m3 of round wood processing capacity

(12% - 15% of total round wood removals) out of action. The closures have not been confined to

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Ac

tua

l N

um

be

r

2004 2005 2006 2007 2008 2009

Dwelling Building Consents Issued in New Zealand ( Years Ending Nov 30th )

New Dwellings New Apartments

No

v-0

5

Fe

b-0

6

Ma

y-0

6

Au

g-0

6

No

v-0

6

Fe

b-0

7

Ma

y-0

7

Au

g-0

7

No

v-0

7

Fe

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8

Ma

y-0

8

Au

g-0

8

No

v-0

8

Fe

b-0

9

Ma

y-0

9

Au

g-0

9

No

v-0

9

400

500

600

700

800

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1,000

1,100

1,200

millio

ns

NZ

D

Value of All Building Consents in New Zealand

Unadjusted monthly value all Building Consents Trend for Monthly Value all Building Consents

smaller mills. Rank Group, which owns Carter Holt Harvey - the biggest player in the industry - closed

four sawmills out of a total of 15 plants around the country. Since then, sagging demand, due in part to

the global credit crisis, has resulted in further closures. Currently, there are approximately 112

processing plants operating in New Zealand producing approximately 4.6 million m3 per annum.

Production Situation

Logging in plantation forests during the second and third quarters of 2009 reached levels not seen since

2002. However, lumber, molding and plywood/fiberboard production was down significantly as a result

of the global credit crisis, which has not only impacted the domestic market but export markets as well.

Source: StatisticsNZ

While the domestic and exports processing sectors have experienced challenging times, an increase in

the volume of log removals has buoyed the harvesting sector. The increase in harvested logs is

primarily the result of one major factor: export log sales to China.

Additional information on log removal and wood production can be found at:

http://www.maf.govt.nz/statistics/forestry/index.htm

Wood Products Outlook It appears that the processing sector has weathered the worst of the housing/building downturn as

domestic and international demand is expected to pick up during the near term. However, the industry is

still far from the heady days of 2001-2004 when housing consents peaked and the volume of lumber

exported to the US market was on the order of 500,000 - 600,000 m3 p.a. It will likely be several years

before building activity gets back to previous levels and, in the short to medium term, wood processing

businesses will have to adjust to lower levels of demand unless there is a significant improvement in the

economy. On the export side, industry contacts are reasonably confident that the volume of logs being

shipped to China will be maintained at the current level for the next 12 months.

0

200

400

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1200

1400

1600

1800

2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3

New Zealand Total Wood Products & Timber Production(1000's m3)

Total Wood Proucts & Timber Production

Trade and Exports

China is New Zealand’s largest export market for logs and wood products followed by Japan, Australia,

South Korea and the United States. Together, these five markets account for approximately 80% of

New Zealand’s forest product exports. With the exception of China, exports to each of these markets

fell on a value basis in MY 2009.

New Zealand Wood Exports by Country

All Log & Wood Products except Pulp & Paper

Partner Country

Millions US Dollars

% chang

e

MY200

3

MY200

4

MY200

5

MY200

6

MY200

7

MY200

8

MY200

9

09 over 08

China 119 109 101 135 187 206 400 94.1%

Japan 309 348 350 276 304 289 217 -

24.7%

Australia 222 254 260 220 245 289 195 -

32.5%

Korea South 180 201 173 197 251 228 191 -

16.1%

United States 231 257 273 259 225 195 125 -

36.0%

India 14 15 18 31 45 53 53 -1.2%

Vietnam 9 14 20 30 39 41 48 18.9%

Saudi Arabia 2 5 7 10 20 33 24 -

26.6%

United Arab Emirates 2 9 10 13 30 38 24

-35.9%

Indonesia 13 12 18 30 33 26 24 -9.1%

Rest of World 111 133 141 134 160 155 121 -

21.7%

Total Exports 1212 1358 1370 1334 1539 1553 1423 -8.4% Source: Global Trade Atlas

New Zealand Pulp & Paper Products Exports by Country

Partner

Country

Millions US Dollars %

change

MY2003

MY200

4

MY2005

MY2006

MY2007

MY2008

MY2009

09 over

08

Australia 253 306 315 217 282 326 231 -

29.0%

China 69 122 126 117 178 147 101 -

31.3%

Japan 44 56 73 48 67 69 73 5.3%

Indonesia 26 40 35 51 39 68 63 -7.1%

Korea South 35 48 44 52 64 62 44 -

28.7%

Philippines 16 19 33 29 33 36 26 -

27.4%

Malaysia 21 23 19 21 24 25 22 -

11.6%

Taiwan 13 18 16 24 31 29 20 -

31.8%

Hong Kong 10 24 21 14 11 20 16 -

19.8%

Thailand 7 12 14 18 24 26 15 -

43.5%

United States 11 13 13 12 11 14 13 -1.7%

Rest of World 49 54 72 69 80 91 73

-19.8%

World Total 554 736 780 672 843 913 698 -

23.6% Source: Global Trade Atlas

Source: Global Trade Atlas

China, South Korea and India are the top destinations for New Zealand log exports.

New Zealand log exports in MY 2009 were up by nearly 25% in USD terms, or a hearty 57% in New

Zealand dollars. The increase was achieved on the back of an increase in log volumes exported to

China, up by a massive 154%. According to industry contacts, the increase in exports to China is

primarily in response to a drop in logs coming from Russia as a result of the 25% export tax on logs

imposed by the Russian Government.

New Zealand Wood Exports to the US

(for marketing years )

0

100000

200000

300000

400000

500000

600000

700000

1991

 

1992

 

1993

 

1994

 

1995

 

1996

 

1997

 

1998

 

1999

 

2000

 

2001

 

2002

 

2003

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

m3 v

olu

me

0

100

200

300

400

500

600

700

800

900

1000

NZ

D/m

3

Total Lumber & Wood Product exports for categories measured by volume (m3)

Export logs (HS 4403) m3

Price for lumber (HS 4407) NZD/m3

Source: Global Trade Atlas

Factors that are influencing New Zealand’s competitiveness in the international market include the

exchange rate and shipping costs. In US dollar terms, exports fell by 14% during MY 2009 year

compared to the previous year but, in New Zealand dollar terms, total receipts were up 8.6%. With the

exchange rate now moving in a much higher band than last year, export receipts are likely to fall in

2010. Shipping costs out of New Zealand have also increased over the last eight to nine months, which

will reduce export receipts.

Source: Global Trade Atlas

New Zealand Log Exports

5859

50335324

6286 6290

8239 8359

-29%

-14%

6%

0%

33%

18%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2003  2004  2005  2006  2007  2008  2009 

1000

's m

3

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

% c

han

ge

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

NZD

2003  2004  2005  2006  2007  2008  2009

New Zealand Log, Wood, Pulp and Paper Exports

(NZ Dollars MY 2003 to MY 2009)

Log Exports Lumber Exports All Other Timber Products Paper Exports Pulp Exports

Source: Global Trade Atlas

Source: Reserve Bank of New Zealand

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

USD

2003   2004   2005   2006   2007   2008   2009

New Zealand Log, Wood, Pulp and Paper Exports (in United States Dollars for MY 2003 to MY 2009)

Lumber Exports Log Exports All Other Timber Products Paper Exports Pulp Exports

NZ Dollar : US Dollar Exchange Rate History

0.0000

0.1000

0.2000

0.3000

0.4000

0.5000

0.6000

0.7000

0.8000

0.9000

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

US

D

USD to buy $1 NZ

Government Policy – Climate Change

Emissions Trading Scheme In September 2008, the former Labour-led Government implemented the Emissions Trading Scheme

(ETS), a major policy initiative designed to address the demands of climate change and fulfill Kyoto

Protocol obligations. The National Party-led Government, which was elected in late November 2008,

amended the ETS in November 2009.

The New Zealand ETS has no overall cap on emissions as the allocation of free credits to large emitters

and agriculture will be on an intensity basis. Free allocation has no firm ending date and may continue

indefinitely, subject to growth in production and allocation reviews. The ETS also includes a

transitional phase, which lasts until January 1, 2013. During this period, there will be a 50% obligation

and a NZ $25 fixed price option for the transport, energy and industrial sectors. This means they will

only have to surrender one emission unit for every two tons of CO2 actually emitted. This effectively

puts the price of carbon at NZ $12.50 per ton of CO2, which will likely depress the price of forestry

credits.

To date, only the forestry sector has entered the ETS, from January 1, 2008, as the entry of other sectors

has been postponed. The energy sector, which accounts for approximately 43% of New Zealand’s GHG

emissions, will enter the scheme on July 1, 2010 and agriculture, which accounts for approximately

48%, is scheduled to enter in 2015. Under the ETS, forests established pre-1990 will incur a penalty if

deforested. Forests established post-1989 may elect to join the ETS and can accumulate and trade

carbon credits as regulated by the ETS and the Kyoto Protocol rules.

It is unclear at this point what impact the ETS will have on new forestry planting and investment

decisions as the regulatory environment is still uncertain.

Carbon Credits As no other sectors with obligations to buy credits have entered the ETS, the domestic carbon credit

market has been slow to develop. However, carbon credits earned by forestry for carbon sequestration

have been sold offshore as forestry owners are looking for ways to monetize their Assigned Amount

Units (AAUs).

In September 2009, South Island forestry company Ernslaw One Ltd sold about 500,000 AAUs, valued

at more than NZ $10 million, to the Norwegian Government. This is believed to be the first

international carbon credit sale by a New Zealand company and possibly the world’s largest forest-sink

sale to date. Industry sources report that the credits were sold for NZ $21 to NZ $22 per ton. Ernslaw

One Ltd is one of the largest owners of private Kyoto compliant forest in New Zealand.

There is a limit to the number of New Zealand units (New Zealand Emissions Unit = 1T CO2 in ETS)

that can be traded offshore. New Zealand must maintain 90% or more of the Kyoto Units (AAU’s)

assigned to it under the Kyoto Protocol Commitment Period Reserve (CPR) in the registry. In order to

export carbon credits, NZUs must first be converted to AAUs. In total, over commitment period one,

New Zealand entities can export a total of 29.3 million AAU’s. To date 1.6 million AAU’s (0.53%) have

been exported.

Under the ETS, forestry entities can register and claim carbon credits (in the form of NZUs) each year

from January 1 to March 31. In 2009, 45 entities registered under the ETS and claimed approximately

690,000 NZUs. So far in 2010, an additional 205 entities have registered bringing the total to 250.

Information on the number of NZUs claimed is not publically available.

Climate Change Negotiations The New Zealand Government is lobbying for more flexible rules on forestry in any post-Kyoto

agreement.

Government Trade Policy

China FTA New Zealand and China signed a bilateral free trade agreement (FTA) in Beijing on April 7, 2008. The

FTA is comprehensive covering goods, services and investment, and provides for the elimination over

time of tariffs on 96% of New Zealand’s exports to China. On full implementation, this will equate to

an annual duty savings of New Zealand $115.5 million (U.S. $82.4 million). In addition to the FTA, a

binding Memorandum of Understanding on Labor was signed with the intention of improving

understanding of labor matters, encouraging dialogue, and promoting sound labor policies and practices.

A binding agreement on environmental cooperation was also signed with the aim of encouraging sound

environmental practices and improving the capacity of each country to address environmental matters

through cooperation and dialogue.

The FTA binds China’s current applied zero tariff rate on logs and sawn timer, which represent

approximately 80% of New Zealand’s wood exports to China. It also provides some additional tariff

preferences for New Zealand on a limited number of products made from radiata pine. Certain

processed wood and paper products, which account for approximately 4% of New Zealand’s current

exports to China, are exempted from tariff reductions. As part of its accession to the WTO, China

agreed that any preferential commitments it makes on wood and paper products in an FTA must then be

offered to all WTO members. Additional information is available at: http://chinafta.govt.New

Zealand/index.php

ASEAN FTA After four years of negotiations, New Zealand, Australia and the Association of Southeast Asian Nations

(ASEAN) signed an FTA in February 2009. The FTA will eventually eliminate tariffs on 99% of New

Zealand’s current exports to the four key ASEAN markets of Indonesia, Malaysia, the Philippines and

Vietnam. On full implementation, this is estimated to equate to an annual duty savings of approximately

New Zealand $50 million based on current trade. The agreement does not contain any specific

agricultural safeguards. In the case of Vietnam, wood pulp incurs a 1% tariff, which will be removed by

2016, and paper products, which have a 20% tariff, will be progressively reduced to zero by 2017. Sawn

logs and lumber already enter duty free. For more information on the agreement, click on this link:

http://www.asean.fta.govt.New Zealand

New Zealand-Gulf Cooperation Council (GCC) Free Trade Agreement Negotiations on the New Zealand – Gulf Cooperation Council (GCC) Free Trade Agreement (FTA)

successfully concluded on October 31, 2009. While details of the agreement are not yet available, it will

likely secure improved access to the GCC, which is made up of Bahrain, Oman, Kuwait, Saudi Arabia,

United Arab Emirates, and Qatar. Total exports to GCC totaled New Zealand $1.3 billion in the year to

June 2009, an increase of 218% since 2000. The group now ranks as New Zealand’s seventh largest

trading partner with bilateral trade worth New Zealand $3.85 billion. Navigate to:

http://www.mfat.govt.New Zealand/Trade-and-Economic-Relations/Trade-Agreements/Gulf-

Cooperation-Council/index.php for more information.

Malaysia – New Zealand Free Trade Agreement The Malaysia – New Zealand Free Trade Agreement (FTA) was signed in Kuala Lumpur on October 26,

2009. Malaysia is New Zealand’s eighth largest export destination, accounting for almost a billion

dollars of exports in 2008. Go to http://mfat.govt.New Zealand/Trade-and-Economic-Relations/Trade-

Agreements/Malaysia/index.php for more information. This FTA will not have a significant influence on

log and wood product exports from New Zealand as nearly all of them are free of tariffs now.

Research

Government Funded Research

Future Forests Research

Future Forests Research (FFR), which was established by the forest industry in 2007 to increase returns

to forest owners through partnerships among growers, scientists and government, released its first report

in October 2009. FFR works with Scion Crown Research Institute in four main areas:

Radiata Management

Diversified Species

Environment and Social theme

Harvesting and Logistics

In November 2009, it was announced that FFR’s proposal submitted to the new Primary Growth

Partnership (PGP) to obtain funds to carry out harvesting research has been accepted by the investment

advisory panel. The total project is for New Zealand $6.5m over 6.5 years with PGP providing funding

to cover 50% of the total. More information on FFR can be found at: www.ffr.co.New Zealand

Solid Wood Initiative (SWI)

SWI is a joint venture between FoRST, Forest and Wood Products Australia, Weyerhauser Ltd and New

Zealand forestry and wood companies to drive research into the development of guaranteed performance

softwood products.

Canterbury University

Scientists at Canterbury University are working on advanced building materials using wood, such as

laminated beams that use wire ropes in their construction to provide compression tension which confer

high flexing properties on to the beam. These specialized beams can be used as the structural

components for buildings up to 20 stories high and could be used in earthquake prone areas for

important municipal buildings such as hospitals.

Private Research Using wood residues as the feedstock,

Lakeland Steel is now running a

continuous process small scale pilot

plant, which produces by pyrolysis: bio-

oils, water, biochar and syn-gas.

Appendix 1. Useful Links for Further Information MAF Situation and Outlook for New Zealand Agriculture & Forestry Report:

http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/2009/09-forestry.pdf

MAF Forestry Site http://www.maf.govt.New Zealand/forestry/

New Zealand Forest Owners Association Website

http://www.New Zealandfoa.org.New Zealand

New Zealand Forestry Facts & Figures

http://www.New Zealandfoa.org.New

Zealand/index.php?/File_libraries_resources/Facts_figures/Facts_Figures_2007_-_2008

Scion Reports on the future for Bio-Energy in New Zealand

http://www.scionresearch.com/__data/assets/pdf_file/0005/5783/Large-scale-bioenergy-from-

forestry.pdf

http://www.scionresearch.com/__data/assets/pdf_file/0014/6800/Bioenergy-Options-Transition-

Report.pdf